Business Context and Reporting Period
Company: Level Brands, Inc. (Note: Metadata referenced "Cbdmd, Inc." but the filing text identifies Level Brands, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: April 12, 2019
Reporting Period Affected: Three months ended December 31, 2018 (originally reported in Form 10-Q filed February 14, 2019).
Key Financial Metrics
This filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. The filing addresses a qualitative accounting error rather than reporting operational financial results.
Material Changes Versus Prior Period
The Company identified an error in its previously issued unaudited condensed consolidated financial statements for the three months ended December 31, 2018. The error involved the failure to apply FASB ASU 2016-01 (Recognition and Measurement of Financial Assets and Financial Liabilities). Consequently:
- Accounting Treatment: Unrealized gains and losses on equity securities were incorrectly recorded as "other comprehensive income" in the original filing. Under ASU 2016-01, these must be recorded in the income statement.
- Impact Areas: The restatement will affect the income statement (other comprehensive income/loss, unrealized gain/loss, earnings per share), the equity section of the balance sheet, and the statement of cash flows.
- Reliance: The previously filed Form 10-Q should no longer be relied upon.
Guidance, Outlook, and Management Commentary
Management Action: The Chief Financial Officer notified the Audit Committee and the Company's auditors (Cherry Bekaert LLP). An amended Form 10-Q containing restated financial statements is expected to be filed as soon as possible.
Operational Impact: Management explicitly states that the restatement is not expected to have any impact on the Company's cash position, cash flow, liquidity, or operations.
Investor Verification Checklist
- Verify the filing of the amended Form 10-Q for the period ended December 31, 2018.
- Review the restated earnings per share (EPS) and net income figures once the amended filing is released.
- Confirm the reclassification of unrealized gains/losses from other comprehensive income to the income statement.
- Monitor for any further disclosures regarding the implementation of ASU 2016-01.